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Do You Pay Taxes On eBay Income?


Q: I read your last column about paying income tax on eBay sales if you are doing it as a business, but as someone who only sells on eBay occasionally I'm still confused if the IRS rules apply to me. Can you tell me more? -- Norman L.

A: Last week's column on whether you were required to report income earned from eBay sales to the IRS sparked a number of additional questions and comments from eBay sellers who were hoping that I could somehow validate that their eBay activities were mere hobbies instead of actual businesses and therefore not susceptible to IRS taxation.

Several folks argued that just because their little eBay hobby generated a little cash, that didn't make it a full blown business. It seems they consider the income from their little hobby to be financial manna from Heaven and thereby not taxable by earthly tax collectors. I've always been amused by folks who try to impress me with talk about their "little side business" but when the subject turns to taxes they suddenly refer to it as "my little hobby."

All kidding aside, the conclusion that I came to after reading each email was always the same: while you may think selling on eBay is just a fun pastime and the money you're making is not reportable as income, depending on the circumstances, the IRS would probably disagree with you.

It seems that everyone likes making money, but hates carving off a piece for good old Uncle Sam. Welcome to free enterprise, folks. If you're going to come to the dance you have to pay the fiddler.

The IRS rules are clear: you must pay taxes on all personal and business income and that includes money you make selling on eBay.

In its most basic sense, the IRS rules can be interpreted to mean that if you buy an old vase at a garage sale for $10 and sell it on eBay (or elsewhere) for $20 you made a $10 profit and therefore must report it as income and pay Uncle Sam his fair share.

In reality, if you are a casual seller who only sells a few items on eBay every now and then it's doubtful the IRS is going to let loose an army of agents to collect taxes on the few bucks you make. However, if you consistently sell on eBay the IRS may deem your activities to be business oriented and you will be required to file a Schedule C and claim the income.

As mentioned last week, the IRS uses a number of factors to determine if an eBay hobby that generates sales revenue is actually a business.

These factors include: - Do you carry on the hobby in a business-like manner? - Do you spend considerable time working on the hobby? - Do you depend on income from your hobby for your livelihood?

If the answer to any or all of these question is yes, you're running a business, not carrying on a hobby, and you are responsible for paying taxes on your income.

What's eBay's take on all this? Naturally eBay is vehemently opposed to anything that might rock the eBay boat. eBay does not does not issue 1099 tax forms to sellers, nor does it report seller's sales figures to the IRS.

eBay considers itself merely to be a facilitator, meaning that they provide a marketplace in which buyers and sellers come together to do business.

Furthermore, under it's current system it would be impossible for eBay to issue accurate 1099s to sellers. eBay does not track if a seller actually gets paid by the buyer, so eBay has no idea how much money - if any - actually changes hands at the end of each transaction.

On the bright side, if you do sell on eBay as a business you can deduct a number of business expenses, including the cost of inventory, listing fees, shipping, envelopes, packing materials, etc.

You might also be able to deduct things like the purchase of a computer for business use, office space (even if it's a home office), office supplies, and more.

Talk to your accountant if there's any doubt as to whether you should or should not be paying taxes on your eBay earnings.

Here's to your success!

Tim Knox

Tim's latest book is "The 30 Day Blueprint For Success!" We asked 58 Top Internet Money Makers: If you lost is all tomorrow and had to start from scratch, what would you do to be back on top in the 30 days? Their answers just might make you rich!

Related Links:
http://www.prosperityandprofits.com
http://www.dropshipwholesale.net


TODAYS NEWS BY OFFICEJAX FREE ADVERTISING AND AD EXCHANGE SOLUTIONSMORE RESOURCES updated Wed. September / 30 / 2020

Q&A: End of biodiesel auctions causes imbalance - Argus Media
Q&A: End of biodiesel auctions causes imbalance  Argus Media

FCC auctions should be a long-term boost for 5G availability - Network World
FCC auctions should be a long-term boost for 5G availability  Network World

Lancaster County's produce auctions get a boost during pandemic - Fly Magazine
Lancaster County's produce auctions get a boost during pandemic  Fly Magazine

DuckDuckGo slams Google’s Android search engine auction as “fundamentally flawed” - The Verge
DuckDuckGo slams Google’s Android search engine auction as “fundamentally flawed”  The Verge

Community rewards 4-Hers' hard work despite cancelled auctions - Bluffton News Banner
Community rewards 4-Hers' hard work despite cancelled auctions  Bluffton News Banner

Pinarello Auctions Off Limited-Edition Road Bikes for Charity - GearJunkie
Pinarello Auctions Off Limited-Edition Road Bikes for Charity  GearJunkie

Davenport auction boasts iconic NASA, space memorabilia - KREM.com
Davenport auction boasts iconic NASA, space memorabilia  KREM.com

100th Bomb Group restaurant up for auction - cleveland.com
100th Bomb Group restaurant up for auction  cleveland.com

"Celebration of the Phillies" Auction Set for October - Sports Collectors Daily
"Celebration of the Phillies" Auction Set for October  Sports Collectors Daily

176-year-old block used for slave auctions set to be displayed in museum, with context - KTLA Los Angeles
176-year-old block used for slave auctions set to be displayed in museum, with context  KTLA Los Angeles

Enjoy art and auctions at Farm to Table(aux), benefitting the Boys & Girls Club - Bakersfield Now
Enjoy art and auctions at Farm to Table(aux), benefitting the Boys & Girls Club  Bakersfield Now

Trio of Spectacular Ferrari's Set For Auction - Sports Car Digest
Trio of Spectacular Ferrari's Set For Auction  Sports Car Digest

eBay Begins Vinyl Obsession Week Featuring RSD Drops, MusiCares Auctions, Indie Partners, More - Live for Live Music
eBay Begins Vinyl Obsession Week Featuring RSD Drops, MusiCares Auctions, Indie Partners, More  Live for Live Music

Annual Erin’s House auction fundraiser goes virtual - WANE
Annual Erin’s House auction fundraiser goes virtual  WANE

JFK Convertible Heads to Auction for Second Time in a Decade - Autoweek
JFK Convertible Heads to Auction for Second Time in a Decade  Autoweek

Solar auctions to spread PV over the commercial landscape - pv magazine International
Solar auctions to spread PV over the commercial landscape  pv magazine International

November auction set for MacMurray College campus - Wichita Eagle
November auction set for MacMurray College campus  Wichita Eagle

Twin replica of Tiger Woods' famous Scotty Cameron putter sets auction record - Golf Channel
Twin replica of Tiger Woods' famous Scotty Cameron putter sets auction record  Golf Channel

Massive Virginia farm and estate just off I-81 heads to auction - Washington Business Journal
Massive Virginia farm and estate just off I-81 heads to auction  Washington Business Journal

The Best Bottles From the Cape Winemakers Guild 2020 Auction - Wine Enthusiast Magazine Online
The Best Bottles From the Cape Winemakers Guild 2020 Auction  Wine Enthusiast Magazine Online

Kaminski Hosts Extensive Auction of Fine Furnishings from Waldorf Astoria New York - WFMZ Allentown
Kaminski Hosts Extensive Auction of Fine Furnishings from Waldorf Astoria New York  WFMZ Allentown

Tiger Woods' backup Scotty Cameron putter recently sells for over $150,000 at auction - CBS Sports
Tiger Woods' backup Scotty Cameron putter recently sells for over $150,000 at auction  CBS Sports

Leland Little's Fall Auction Led By $44840 Sparkler - Antiques and the Arts Online
Leland Little's Fall Auction Led By $44840 Sparkler  Antiques and the Arts Online

Result of the auction of treasury bills on 29 September 2020 - GlobeNewswire
Result of the auction of treasury bills on 29 September 2020  GlobeNewswire

NDSU Game Day Auction Scheduled for this Saturday - NDSU - NDSU Bison Athletics
NDSU Game Day Auction Scheduled for this Saturday - NDSU  NDSU Bison Athletics

American Cancer Society To Hold Virtual Hope Gala Honolulu With Online Auction - Maui Now
American Cancer Society To Hold Virtual Hope Gala Honolulu With Online Auction  Maui Now

David Dike Fine Art Fall Auction Goes Virtual Oct. 3 - Focusdailynews
David Dike Fine Art Fall Auction Goes Virtual Oct. 3  Focusdailynews

Cal Ripken Jr. To Auction Memorabilia From Record-Breaking Game - Havre de Grace, MD Patch
Cal Ripken Jr. To Auction Memorabilia From Record-Breaking Game  Havre de Grace, MD Patch

Items From Cal Ripken Jr’s Entire Baseball Career Up For Auction - CBS Baltimore
Items From Cal Ripken Jr’s Entire Baseball Career Up For Auction  CBS Baltimore

Auction Featuring Vin Scully’s Personal Items Garners Over $2M - CBS Los Angeles
Auction Featuring Vin Scully’s Personal Items Garners Over $2M  CBS Los Angeles

Star-studded Hill Country ranch dances onto auction block for $4.75 million - CultureMap Houston
Star-studded Hill Country ranch dances onto auction block for $4.75 million  CultureMap Houston

Classic car and automobilia auction returns to Expo this weekend - Great Bend Tribune
Classic car and automobilia auction returns to Expo this weekend  Great Bend Tribune

Andalusia holds online "Cabaret by the River," auction - Bucks County Courier Times
Andalusia holds online "Cabaret by the River," auction  Bucks County Courier Times

SBI mega e-auction for properties across the country today: Check eligibility, how to apply - Mint
SBI mega e-auction for properties across the country today: Check eligibility, how to apply  Mint

France Puts 5G Mobile Frequencies on Auction Block - Courthouse News Service
France Puts 5G Mobile Frequencies on Auction Block  Courthouse News Service

Auction Prices That Take Your Breath Away - The New York Times
Auction Prices That Take Your Breath Away  The New York Times

HSFAAuctions Present The Preeminent Warhol Online Auction - PRNewswire
HSFAAuctions Present The Preeminent Warhol Online Auction  PRNewswire

Eds: Repeating to correct auction dates. - San Francisco Chronicle
Eds: Repeating to correct auction dates.  San Francisco Chronicle

Bitcoin Exchange Owner Convicted for Role in Web Auction Fraud Scheme - Security Boulevard
Bitcoin Exchange Owner Convicted for Role in Web Auction Fraud Scheme  Security Boulevard

Fort Bend County Fair holds modified youth livestock auction - Chron.com
Fort Bend County Fair holds modified youth livestock auction  Chron.com

MacMurray College real estate going to auction - Jacksonville Journal-Courier
MacMurray College real estate going to auction  Jacksonville Journal-Courier

Otsego to auction tax-foreclosed properties next month - Oneonta Daily Star
Otsego to auction tax-foreclosed properties next month  Oneonta Daily Star

Cowan's Sets Auction Record For Native American Tobacco Bag At $131250 - Antiques and the Arts Online
Cowan's Sets Auction Record For Native American Tobacco Bag At $131250  Antiques and the Arts Online

Virtual quilt auction planned | News, Sports, Jobs - Iron Mountain Daily News
Virtual quilt auction planned | News, Sports, Jobs  Iron Mountain Daily News

Humane Society's virtual auctions aim to boost fundraising - Bowling Green Daily News
Humane Society's virtual auctions aim to boost fundraising  Bowling Green Daily News

Huntsville Mayor reacts to Remington’s Bankruptcy Auction - WAFF
Huntsville Mayor reacts to Remington’s Bankruptcy Auction  WAFF

9000 Bottle Whisky Collection From A Former "Whisky Novice" Goes Up For Auction - The Whiskey Wash
9000 Bottle Whisky Collection From A Former "Whisky Novice" Goes Up For Auction  The Whiskey Wash

On 50 Lots, Doyle's Important Paintings Auction Takes $1.7 Million - Antiques and the Arts Online
On 50 Lots, Doyle's Important Paintings Auction Takes $1.7 Million  Antiques and the Arts Online

Derek Sanderson recalls his playing days ahead of auction - The Boston Globe
Derek Sanderson recalls his playing days ahead of auction  The Boston Globe

Massive whiskey collection put together by novice may earn millions at auction - Fox News
Massive whiskey collection put together by novice may earn millions at auction  Fox News

Exclusive: Pakistan to auction extra telecom spectrum; seeks $1 billion - sources - Reuters
Exclusive: Pakistan to auction extra telecom spectrum; seeks $1 billion - sources  Reuters

YMCA hosts online auction to benefit scholarship fund - Grand Forks Herald
YMCA hosts online auction to benefit scholarship fund  Grand Forks Herald

A Thoroughly Restored 1961 MG MGA Roadster Will Lead the Petersen Museum’s Online Gala Auction - Robb Report
A Thoroughly Restored 1961 MG MGA Roadster Will Lead the Petersen Museum’s Online Gala Auction  Robb Report

FGCU Athletics Announces Sustaining Flight Fundraiser and Auction - FGCU Athletics
FGCU Athletics Announces Sustaining Flight Fundraiser and Auction  FGCU Athletics

See farm auction draws crowd in Carleton - Monroe Evening News
See farm auction draws crowd in Carleton  Monroe Evening News

Bidding in first of 2 online auctions for confiscated hunting, fishing equipment open, ends Saturday - KSTP
Bidding in first of 2 online auctions for confiscated hunting, fishing equipment open, ends Saturday  KSTP

Bonnette Auctions announces upcoming auction on Saturday - KALB
Bonnette Auctions announces upcoming auction on Saturday  KALB

Audubon Letters on Books & Bookselling Head to Auction - Fine Books & Collections Magazine
Audubon Letters on Books & Bookselling Head to Auction  Fine Books & Collections Magazine

Unicorn Auctions Offers An Online Whiskey Auction Model To American Consumers - The Whiskey Wash
Unicorn Auctions Offers An Online Whiskey Auction Model To American Consumers  The Whiskey Wash

Nolensville Historical Society to host auction fundraiser for Morton-Brittain House - williamsonherald.com
Nolensville Historical Society to host auction fundraiser for Morton-Brittain House  williamsonherald.com

Digital auto auctions are effective and safer - Automotive News
Digital auto auctions are effective and safer  Automotive News

Nebraska: What’s Hot on the Auction Block - Columbus Telegram
Nebraska: What’s Hot on the Auction Block  Columbus Telegram

Result of the buy-back auction of 0.25 per cent DGB 2020 - GlobeNewswire
Result of the buy-back auction of 0.25 per cent DGB 2020  GlobeNewswire

Nashville: An Auction for ACM Lifting Lives Covid 19 Response Fund | Charity Auction - Christie's
Nashville: An Auction for ACM Lifting Lives Covid 19 Response Fund | Charity Auction  Christie's

Bruneau & Co.'s October 17th auction features vintage comic books, Pokemon collectibles, toys, dolls - ArtfixDaily
Bruneau & Co.'s October 17th auction features vintage comic books, Pokemon collectibles, toys, dolls  ArtfixDaily

Auction to benefit VFW Auxiliary member | News | parsonssun.com - Parsons Sun
Auction to benefit VFW Auxiliary member | News | parsonssun.com  Parsons Sun

RM Sotheby's Auburn Auction celebrates 50 years of a Labor Day tradition - wpta21.com
RM Sotheby's Auburn Auction celebrates 50 years of a Labor Day tradition  wpta21.com

Sotheby’s auctions AIC professor’s photos - WWLP.com
Sotheby’s auctions AIC professor’s photos  WWLP.com

Auction.com enables remote bidding on live foreclosure properties - HousingWire
Auction.com enables remote bidding on live foreclosure properties  HousingWire

Church buys from local business to support annual silent auction - Cape Cod Times
Church buys from local business to support annual silent auction  Cape Cod Times

Historic Brunswick hotel sold at auction - Portland Press Herald - Press Herald
Historic Brunswick hotel sold at auction - Portland Press Herald  Press Herald

Westwoods First Baptist Church kicks off online silent auction for shutters - Wicked Local Sharon
Westwoods First Baptist Church kicks off online silent auction for shutters  Wicked Local Sharon

Gilliam Tops Weschler's Capital Collections Auction - Antiques and the Arts Online
Gilliam Tops Weschler's Capital Collections Auction  Antiques and the Arts Online

Own a piece of Chiefs history: Union Station memorabilia up for auction - KMBC Kansas City
Own a piece of Chiefs history: Union Station memorabilia up for auction  KMBC Kansas City

World Squash Day Auction to Take Place October 3-10 - Around the Rings
World Squash Day Auction to Take Place October 3-10  Around the Rings

Safe distancing: Airport's auction of abandoned vehicles to be held online this year - Pittsburgh Post-Gazette
Safe distancing: Airport's auction of abandoned vehicles to be held online this year  Pittsburgh Post-Gazette

Auction Alert: The Original Rosie The Riveter Had Amazing Jewelry - JCK
Auction Alert: The Original Rosie The Riveter Had Amazing Jewelry  JCK

Legendary Dodgers Broadcaster Vin Scully to Auction Off Personal Items - NBC Southern California
Legendary Dodgers Broadcaster Vin Scully to Auction Off Personal Items  NBC Southern California

One of the last privately-owned Botticelli portraits could sell for over $80M - CNN
One of the last privately-owned Botticelli portraits could sell for over $80M  CNN

El Paso County still holding auctions in person, looking for options to make them safer - KFOX El Paso
El Paso County still holding auctions in person, looking for options to make them safer  KFOX El Paso

Vin Scully’s Personal Collection Of Dodgers Memorabilia Up For Auction - CBS Los Angeles
Vin Scully’s Personal Collection Of Dodgers Memorabilia Up For Auction  CBS Los Angeles

Leading Auction House Christie's Listing Bitcoin Art for the First Time - Bitcoin News
Leading Auction House Christie's Listing Bitcoin Art for the First Time  Bitcoin News

Solve a Clandestine Coronado Crime with Your Family; First-Ever CSF Auction Gets a Mystery Makeover! - Coronado Times Newspaper
Solve a Clandestine Coronado Crime with Your Family; First-Ever CSF Auction Gets a Mystery Makeover!  Coronado Times Newspaper

Arabian horse farm with Patrick Swayze connection up for auction in Texas Hill Country - KSAT San Antonio
Arabian horse farm with Patrick Swayze connection up for auction in Texas Hill Country  KSAT San Antonio

How to buy a house at auction - MSN Money
How to buy a house at auction  MSN Money

Pennsylvania to auction more than 600 vehicles on Oct. 13 - Daily American Online
Pennsylvania to auction more than 600 vehicles on Oct. 13  Daily American Online

'World's largest private whisky collection' goes up for auction - BBC News
'World's largest private whisky collection' goes up for auction  BBC News

Farm Safety At Christian County Livestock And Roeder Auction - wkdzradio.com
Farm Safety At Christian County Livestock And Roeder Auction  wkdzradio.com

NYS Sen. Jim Seward closely monitoring auction of Remington Arms - whcuradio.com
NYS Sen. Jim Seward closely monitoring auction of Remington Arms  whcuradio.com

Details On Remington Auction Coming Out - WUTR/WFXV - CNYhomepage.com
Details On Remington Auction Coming Out  WUTR/WFXV - CNYhomepage.com

HiBid.com Auctions Soared Past $45.3 Million Last Week; Farm Equipment, Coins, Classic Cars & More for Sale Now - PRNewswire
HiBid.com Auctions Soared Past $45.3 Million Last Week; Farm Equipment, Coins, Classic Cars & More for Sale Now  PRNewswire

Auction of La Grange hand-decorated party carts raises more than $5,000 for non-profit organizations - Chicago Tribune
Auction of La Grange hand-decorated party carts raises more than $5,000 for non-profit organizations  Chicago Tribune

Greenville Chamber's Auction & Casino Night Is Saturday; RAFFA Virtual Banquet Is Tonight - 88.9 KETR
Greenville Chamber's Auction & Casino Night Is Saturday; RAFFA Virtual Banquet Is Tonight  88.9 KETR

‘Holy grail’ of Beatles’ rarities, signed on train to DC concert, up for auction - WTOP
‘Holy grail’ of Beatles’ rarities, signed on train to DC concert, up for auction  WTOP

Hill Country ranch with 234 acres and dance floor created for Patrick Swayze up for auction (slideshow) - San Antonio Business Journal
Hill Country ranch with 234 acres and dance floor created for Patrick Swayze up for auction (slideshow)  San Antonio Business Journal

Virtual quilt auction to be held | News, Sports, Jobs - Marquette Mining Journal
Virtual quilt auction to be held | News, Sports, Jobs  Marquette Mining Journal

Downtown properties headed to auction after hotel plans are scrapped - Louisville Business First
Downtown properties headed to auction after hotel plans are scrapped  Louisville Business First

DNR sets 2 confiscated hunting, fishing equipment auctions | News - Burnett County Sentinel
DNR sets 2 confiscated hunting, fishing equipment auctions | News  Burnett County Sentinel

Deals Galore: Better Business Bureau fund raiser auction goes online - ABC 36 News - WTVQ
Deals Galore: Better Business Bureau fund raiser auction goes online - ABC 36 News  WTVQ

Alongside Rare Botticelli, Sotheby’s to Offer $20 M. Rembrandt Biblical Scene in January - ARTnews
Alongside Rare Botticelli, Sotheby’s to Offer $20 M. Rembrandt Biblical Scene in January  ARTnews

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